Here is a timely and easy-to-read post about gift-giving you might want to keep in mind this holiday season. This article was originally published in the Pauls Valley Democrat and was written by Dan Barney and published 12/16/21.
Mr. Barney writes the following…
“With the advent of Christmas, now is a good time to review some of the ways in which you can make gifts. Gifts can be made to qualified organizations or to family and loved ones. As opposed to simple annual cash gifts, the planning community has developed an endless array of techniques for making large gifts to charity. In addition, with the current tax laws, you can essentially make unlimited gifts to children, grandchildren, or to other special persons in your life.
A few facts about gifts:
- Gifts to a qualified charity are not taxed under gift tax law and can receive a charitable deduction for income tax purposes.
- There are ways to structure a gift so that you can take a tax deduction today but continue to gain personal benefit from the funds you set aside.
- Gifts of appreciated assets that you make today can eliminate any capital gains you would otherwise pay on the growth in value of those assets.
- Charitable gifts qualify for a tax deduction only if they are made to organizations that are “qualified” by the IRS. Generally, such organizations include churches, educational organizations, community hospitals, United Way, Red Cross, Boy Scouts, and any 501c(3) organizations that serve the community.
- You can give appreciated assets to members of your family and they will receive the gift with your basis in the asset. In that way, you avoid the need to sell that asset and thus incur the capital gain to your account. For example, you could give appreciated stock and there would be no capital gains tax until the recipient sells the stock. Charitable organizations qualify if they:
a. Operate strictly for religious, charitable, scientific, literary, or educational purposes; and
b. No part of their earnings can benefit any private shareholder; and
c. The organization cannot attempt to influence political campaigns or legislation.
6. Gifts are free of tax considerations for most people because they are not counted unless they exceed $15,000 to an individual. In addition, even if they are greater than that annual exemption level they do not result in immediate tax. They simply detract from your lifetime gift/estate tax allowance that is now almost 12 million dollars per person.
So – feel free to give to others. The IRS does maintain a list of currently qualified charitable entities in IRS Publication 78. Christmas is a time for giving – fortunately, the tax structure does support such giving.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate, or trust administration in Cincinnati (and
throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate, or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526). David H. Lefton is an Estate Planning and Probate Attorney. He is a partner in the law firm of Barron, Peck, Bennie & Schlemmer.